January 13, 2019

Alphabet's Andy Rubin Crisis - Now, 2 Shareholder Derivative Lawsuits

Last week the ghost of the massive payout to Andy Rubin returned to haunt Alphabet, parent of Google.

As many recall, an internal investigation found credible an employee complaint of sexual harassment by Android phone executive Rubin. When he and Alphabet parted ways his exit package totaled $90 million. There were also other monetary treats involved.

That triggered a walkout by thousands of Google employees. One result was that the corporation ditched its mandatory arbitration provision for employees reporting sexual abuse and allowed class action litigation.

More recently, two shareholder derivative lawsuits have been filed by investors. Essentially, they contend mismanagement of the Rubin matter. That resulted, they claim, in consequences ranging from waste of corporate assets to unjust enrichment.

The more interesting of the two is "Martin v. Page." Among the defendants are Alphabet's board.

The litigation contends improper payout, failure to disclose publicly why Rubin was going, and the company's making an investment in his new venture. The plaintiff James Martin is being represented by, among others, the Renne Public Law Group.

The litigation doesn't request a specific amount of money as restitution. Instead it asks for the return of all the profits and compensation by those in the loop of alleged sexual harassment. In addition, it requests changes in the corporate structure, including nominating three new candidates to the board. That goes to the heart of governance issues.

Likely, these investor lawsuits will embolden other constituencies to go the litigation route. If any of the lawsuits go to trial, Alphabet's inner workings will be made public in the courtroom. That's why these two, at least, will be settled.

After almost a decade of being tethered to the iPhone, I have switched to a low-feature flip phone. That has given me more control over my professional life.

A growing fantasy among executives and managers is living in a cottage, somewhere off the grid.

The new anti-hero is Christopher Knight who spent 27 years in an isolated part ofthe Maine woods. The detailed chronicle of how Knight made it without a job, human companionship or sophisticated technology is recounted by Michael Finkle in the book "The Stranger in the Woods."

Sigmund Freud's notion of civilization and its discontents could be recast as disruptive technology and its discontents.

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